Best Ways to Borrow Money for College

If your student's financial-aid package is made up entirely of grants and work-study, with no loans, consider yourself blessed. If you have to borrow, start with the programs below. All but the institutional loans are backed by the federal government.

Perkins

Available only to students with exceptional need, Perkins loans carry a fixed 5% interest rate. Repayment begins nine months after graduation; until then, the federal government picks up the interest. If your student qualifies, the financial-aid award will say so.

Subsidized Staffords

Like Perkins loans, subsidized Staffords are need-based. Loans disbursed for the 2008-09 academic year carry a fixed 6% interest rate. The feds pay the interest until repayment begins, six months after your student leaves school. Borrowers can choose among several repayment options.

Unsubsidized Staffords

Any student who applies for federal financial aid can get these loans, but interest starts accruing as soon as the loan is disbursed. The rate is fixed at 6.8%. As with subsidized Staffords, borrowers can defer repayment until six months after leaving school and choose among several repayment plans.

Parent Plus

You have to pass a basic credit check to get one of these loans, which carry a fixed interest rate of 8.5%. Repayment begins within 60 days of disbursement, but some lenders let you defer repayment until after your student graduates.

Institutional Loans

Offered or sponsored by the school itself, they can be a great deal -- or not. Examine the terms before you sign up.

For more information or to review a loan application, visit the U.S. Department of Education's Federal Student Aid site.